Harry Winston Diamond Corporation and the Diamond Asset Advisors (DAA) have entered into a partnership to establish a polished diamond investment fund.

The terms of the partnership stipulate that Harry Winston will source high-quality diamonds for investment – some of which will come from the company's own stock. The fund will buy the diamonds and then hand them over to Harry Winston on a consignment basis, at which stage Harry Winston will use them to craft its diamond jewelry and watches.

The price Harry Winston pays to replace the diamonds sold in its finished products will determine the investment fund's market value.

According to the company, polished diamonds consigned under the investment partnership will increase its available diamond jewelry inventory without demanding additional capital investment and will reduce the company's exposure to volatile diamond trading prices.

Harry Winston Chairman and CEO Bob Gannicott said that the agreement with the DAA would provide "innovative and efficient" way for the company to meet its growth objectives.

The fund expects to raise its first $100 million later this year, with another $150 million to be raised in 2012. DAA will be responsible for managing the fund.